Directions After studying all of the assigned learning materials--and especially focusing on the elements, steps, and/or factors discussed in them--read the scenario below and address the problem that follows. While preparing your responses to the problem, be sure to consider the following grading standards for what is considered "A" work: 1. Conclusion (5%): Begins response with a concise, clear, and reasonable assertion that directly addresses and incorporates the issue that the problem presents. (Usually, one sentence should suffice.) 2. Rule (Rule of Law) (30%): Explains the rule(s) of law applicable to the issue(s) arising from the facts. Teaches the reader the legal rules that are required to address the problem. In other words, the response explains the relevant law (legal rule) and breaks it down into the proper elements and/or factors as necessary. 3. Analysis (30%): Applies the rule to the facts: Articulates the supporting reasoning for the conclusion by applying/linking the rule (and each element and/or factor in the rule) to the relevant facts. Uses relevant and proper legal terminology drawn from the assigned learning materials. Highly distinctive responses may further support reasoning through appropriate comparisons to analogous issues in cases (precedent) that may have been examined in the assigned learning materials. 4. Organization, Language Mechanics, and Professional Style (15%): Follows a format and organizational structure that breaks the response into three distinct sections: (1) Conclusion, (2) Rule, and (3) Analysis. Writing is clear, concise, and free of errors. Uses professionally acceptable and coherent grammar and paragraph/sentence structure. Uses relevant and proper legal terminology drawn from the assigned study materials. Scenario The following facts are based on a lawsuit that involves a plaintiff attempting to sue shareholders of two corporations to collect a debt arising out of a contract that the plaintiff made with one of the corporations (not either of the shareholders). A-1 Corp. was incorporated in September 2017. At all times, the sole stockholders being Ron Darling, his wife (Lora Darling), George Foster, and his wife (Dina Foster), each owning 250 shares of stock which had been issued at $1.00 per share. The same parties composed its board of directors. Mr. Darling was at all times its president and treasurer, and Mr. Foster was at all times its vice-president and secretary. There is no evidence that A-1 conducted regular board meetings, and no evidence of meeting minutes was ever disclosed. The available evidence indicates that A-1. was organized simply for the purpose of (1) acquiring a tract of land in nearby Harlan County that was co-owned by Mr. Darling and Mr. Foster (they originally purchased the land in December 2018), and (2) develop the land by having homes built on it. On January 1, 2019, Darling and Foster sold the property sold to A-1 for $1 million. Bluebell financed the purchase in the form of a "demand" promissory note to Darling and Foster. (In other words, A-1 did not pay for the property at the time of the transaction. The nature of the promissory note entitled Darling and Foster to present the note to A-1 at any time and demand payment.) Bluebell Inc. was incorporated in June 2018. At all times, the sole stockholders consisted of Mr. Foster and Mr. Darling, each owning 50 shares of stock which had been issued at $1.00 per share. Mr. Foster was at all times its president and Mr. Darling was at all times its vice-president and secretary. Its board of directors consisted of Mr. Foster, Mr. Darling, and an attorney who represented both of them. Monthly board meeting minutes disclosed that their attorney was never present and did not participate in any meetings of the board of directors after August 2018. No evidence of board meeting minutes after December 2018 were ever disclosed. A-1 and Bluebell shared the same office space and many of their employees were employees of both corporations simultaneously. On January 10, 2019, A-1 entered into a building construction contract with Bluebell whereby Bluebell agreed to construct houses on the 100 lots in the tract at cost plus a fee of $50,000 per house. On the following day, A-1 obtained a loan $10 million from Harlan County Bank, secured by the deed to the property. In connection with this loan, Bluebell, A-1, Mr. and Mrs. Darling, and Mr. and Mrs. Foster executed an agreement with the bank whereby they guaranteed the construction and completion of each house and the complete performance of all work required to be done by the plans and specifications that were presented to the bank. All of these parties also guaranteed the payment in full for all labor and materials used in connection with the construction work and the completion of each of the houses free and clear of any and all debts to any contractors working on the construction. In addition to the agreements mentioned above, Darling and Foster executed another agreement with the bank whereby they authorized the bank to transfer the loan proceeds to A-1 or Bluebell At the time of disbursement by the bank under the terms of the loan agreement. There was no evidence to indicate that either A-1 or Bluebell was engaged in any business dealings other than the construction and sale of the houses upon the tract in question. Financial records of the two corporations disclosed numerous loans from Bluebell to A-1 and from A-1 to Bluebell. Both corporations appeared to have operated largely on money borrowed interest-free from one another, from the bank, and from the Darling and Foster families. Bank account records showed that funds frequently flowed from A-1's account to Bluebell's account (and vice versa) and back and forth between both business accounts and a joint account owned by Darling and Foster. Bluebell was frequently didn't have to funds to pay its subcontractors for the work on the construction of the houses. In March 2019, Bluebell contracted with the plaintiff, Leslie Knope, for the supply of doors, door frames, door jams, and other related goods and merchandise to be used in the construction of the houses. The items were sold and delivered. Bluebell never paid Knope for the $250,000 in goods. Knope tried to collect from Bluebell and A-1, which had hired Bluebell in the first place but each corporation was already too heavily indebted to pay its obligations. So, Knope filed suit against Darling and Foster, personally. Darling and Foster assert that they cannot be personally liable for the debts of either of the corporations, so the case should be dismissed. Prompt Discuss whether there is a legal basis for the court to allow Darling and Foster to be personally liable to Knope for the breach of contract that was between Knope and A-1 Corp.